Things are not looking good, people. Cabinetmaker American Woodmark (Nasdaq: AMWD) bombed its earnings report Tuesday, following up on Masco's (NYSE: MAS) miserable report earlier this month. More diversified Fortune Brands (NYSE: FO) did better in January, but its home-products division performed particularly poorly. When will the carnage end?

Next week offers our first chance at a glimpse of a better tomorrow, as Lowe's (NYSE: LOW) and Home Depot (NYSE: HD), will report their fiscal 2007 numbers. We'll address Lowe's separately. For now, let's take a look at what's happening at Big Orange.

What analysts say:

  • Buy, sell, or waffle? Twenty-three analysts wander the aisles at Home Depot, in search of a light bulb. Ten of them light up a "buy" sign, a dozen say "hold," and one would sell.
  • Revenue. On average, they're looking for quarterly sales to slide 11% to $18.06 billion.
  • Earnings. Similarly, profits are predicted to drop 14% to $0.43 per share.

What management says:
Management updated us on its full-year guidance expectations last quarter. Sort of. But riddle me this: Why can't a company with teams of financial analysts on staff, and accounting firms on retainer, give its shareholders a straight answer to a simple question?

Management's mumbo-jumbo guidance offered investors an outlook for 2007 that suggested that earnings would decline by as much as 11% from the previous year. However, Home Depot said that an additional 53rd week would tack on $0.05 to the per-share figure. In sum, investors can expect roughly $2.54 per share.

What management does:
Considering the oblique manner in which Home Depot laid out guidance, perhaps I shouldn't have been so eager to ask management to begin including cash flow information in its earnings releases. (Be careful what you wish for.) The number finally came out with Home Depot's 10-Q filing -- $2.6 billion in cash profits generated year to date, a 28% decline versus this time last year, and worse than the 23% decline in reported net income. Speaking of which, here's part of the reason for both of those declines:

Margins

7/06

10/06

1/07

4/07

7/07

10/07

Gross

33.6%

33.6%

32.8%

32.7%

32.7%

32.7%

Operating

11.8%

11.7%

10.8%

10.2%

9.9%

9.4%

Net

7.5%

7.5%

6.3%

5.9%

5.6%

5.2%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
So with business in the dumps, should you be buying this stock on its way down, sitting on your shares for the time being, or cashing out? A recent deep dive suggested that at least one Fool is bullish on the company.

What do the friendly Fools at Motley Fool Inside Value think? Take a free trial of the service and find out.

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Fool contributor Rich Smith does not own shares of any company named above. Home Depot is an Inside Value selection. Masco is an Income Investor recommendation. Get your free refresher course in The Motley Fool's disclosure policy right here.